8.1 General criteria

The determination of the level of capital should aim at ensuring the authorised credit institution’s compliance with own funds and other prudential requirements at the time of authorisation and through a severe but plausible stress scenario over at least three years.

For the purposes of granting the authorisation, the level of capital should be determined based on the initial capital and on the own funds requirements in accordance with the methodology laid down in section 8.2.

For the purposes of the CAM, the initial capital is a fixed amount set out in national law in accordance with Article 12(1)²⁴ CRD or with Article 12(4)²⁵ CRD, as the case may be.

²⁴ ‘Without prejudice to other general conditions laid down in national law, the competent authorities shall refuse authorisation to commence the activity of a credit institution where a credit institution does not hold separate own funds or where its initial capital is less than EUR 5 million’.

²⁵ ‘Member States may grant authorisation to particular categories of credit institutions the initial capital of which is less than that specified in paragraph 1, subject to the following conditions: (a) the initial capital is no less than EUR 1 million; (b) the Member States concerned notify the Commission and EBA of their reasons for exercising that option’.

The own funds requirements are risk-based²⁶ and leverage-based²⁷ capital requirements in accordance with Title I, Part Two and Three CRR.

²⁶ CET1, T1, Total Capital requirements.

²⁷ Leverage ratio.

Irrespective of the differences across the EU relating to the absolute value of initial capital set out in national law, the CAM aims to ensure that the level of capital is set to ensure compliance with prudential requirements at authorisation in the baseline scenario, and in the course of at least three years of the planning time horizon in a severe but plausible stress scenario.

The determination of the level of capital at authorisation and the amount to be paid up at authorisation as set out in section 8.2 and section 8.3 below are without prejudice to more stringent requirements laid down at the national level.